The COVID-19 Weekly
We woke to horrible news on Saturday morning that the US had set a new global record with 1,480 virus deaths in 24 hours (Johns Hopkins). This explosion in the lethality count is not good in any shape or form; all these deaths are starting to haunt me. Our energies should be less focused on the yield curves and more focused on the rolling out of the proper test, track and trace technology in the major economies.
So, as opposed to focusing on the market, I'm going to share some information I gathered from UBS Bank's COVID -19 EXPERT call #2, which featured renowned expert Dr. Michael Osterholm. He is Regents Professor, McKnight Presidential Endowed Chair in Public Health, the director of the Center for Infectious Disease Research and Policy (CIDRAP), and an adjunct professor in the Medical School, all at the University of Minnesota.
Trading is the easy part, as the Federal Reserve and central banks around the world have ensured the capital markets will function, but containing this virus is not. I hope you find some comfort and wisdom in the words from this world renowned expert. But follow all the experts!
UBS Bank's COVID-19 EXPERT
There has been confusion around the Imperial College model, with backing down and restating of numbers, do you have any clarity?
All models are wrong, but some have helpful information. If you look at the original report, the lower bound, which is what everyone focused on, is the lower bound with social distancing, was the one that was important to think about for the strain on hospital beds. In the same report, he looked at the immediate time period, but he also looked at the time period beyond and through the end of the year. You can't just look at this over the next few weeks. There has been no backing off; the numbers are the same as in the original report. On the Washington Mode: there was nothing unusual there either, it just assumed a total lockdown. This number was dismissed because it assumed a four-month total lockdown, which is completely impossible. Even now, you see that they have to change it on a daily basis. Dr. Osterholm says that you should just forget the models; they're a black box. His perspective is to just look at the very simple numbers.
There are 320m people in the United States. If you assume half infected in the next 6-8 months, which is very realistic, about 80% of that 160m will have no symptoms, with 10% needing hospitalization. 5% will need ICU, and 1% will die. 1% of 160m is 1.6m people. People do not realize that this is long term.
In 1918, their pandemic lasted until 1920, and that only ended because enough people got immunity that it died off. We don't have any guarantee of a vaccine right now, so you have to assume for the next 18-20 months this will continue to spread. You can't get hung up on these black-box model.
The White House rhetoric has been flip-flopping between being very positive on the US positioning for the virus to extremely harmful, do you have any thoughts?
[There is] such disorganization and lack of clarity or planning in this administration. There is not one person in this administration that has experience in public health or modeling. This is a rudderless ship. The group of public health people that have worked on this issue tirelessly throughout the year are all in agreement over the numbers and are urging that the CDC be inserted back into the response. The daily briefings have not given you the severity of the equipment shortages at all. The long term is that no one is asking how many units people will be short for PPE, ventilators, etc.… we're running out of drugs to put people on ventilators. When you talk about case fatality rates, when you don't have ventilation or enhanced medical care, these will go up significantly.
The economy has come to a complete standstill. If we say to those under 55, “Go to work, wear a mask and stay away from those over that age or with a compromised immune system”, would that work?
First of all, that would work. The one challenge that does come to play here, if you look at New York City right now, we're seeing more and more young people that are getting critically ill. The primary risk factor is obesity. We're leading the world in that 45% of our citizens over the age of 50 are obese. This is very well documented in the literature for influenza. This means that we'll have more people in the younger age cohort who will get sick and die, but still not on the level of the older population.
What's your suspicion for why it takes so long for a second wave, after the relaxation from the quarantine?
We're getting more people that are now immune who were already infected. People keep asking me, “why don't we do it like Singapore?” Just now, Singapore announced closure due to the significant uptick in cases. I talk with the group in Singapore, and they're getting 40-60 cases a day where they have no idea what the cause of the spread is. China just reported 31 cases from two different provinces, with another 60 asymptomatic cases. They don't count individuals, and if you're positive, you're not a case. That's just cooking the books. I would say the same thing about the United States. You have to be very careful when looking at the numbers. There's no other country that can do what China has done, but at the same time, it's coming back.
The cumulative Cases in China have been flat, as have deaths. How should we think about this?
You have no idea what's happening or not happening with cases there. They have 60 new cases today, with 53 of those being local, and that's in the face of the most stringent measures in the history of modern medical history. We can't get even close to that level of standards! China seeded the rest of the world initially, but now the world is seeding the globe. China has reported that it had over 500 individuals in the last month who were screened and had the virus. The fact that Singapore is now on closure, no one would've believed 60 days ago. Same thing in Hong Kong. Same thing in Korea. This virus is so difficult to contain. There are two ways this resolves: 1) we get a vaccine, or 2) it burns through the entire population.
New York reaction – thoughts?
Our reaction in New York is to send all the resources to the one big fire, not realizing that there are 50 other smaller fires to put out. You may be lucky to be one of the earlier people hit. All the resources are now empty, and, as this moves beyond New York, there are going to be a number of areas that don't have any equipment coming in. The governors are incredibly frustrated with the administration, and rightfully so! You put your order in and don't get anything. Only now did they finally admit that the stockpile internationally is empty. Don't be fooled by hearing that there's more equipment coming; there just isn't. There's more going into New York today than there was a week ago, but that means there won't be stuff going elsewhere in the future.
Hydroxychloroquine – thoughts?
All I can say right now is that it's very premature. There are holes big enough to drive semis through in the studies you pointed out. We need more information. One of the challenges we see in the worst stages of this disease is that people are dying of acute myocardial infarction, which chloroquine would make worse. As I mentioned on the last call, I used to chair for the WHO, and people would've bet their careers on a [particular] drug being the best drug to treat something. Later, when we tested this, it didn't even finish in the top four. The point is, we need more information.
Predictions for the next two weeks and two months?
We predicted on January 20th that it was going to be a pandemic, and even pointed out correctly which were going to be the hotspots. Now we're in much more of a grey area. This virus will continue to find people that are susceptible until they aren't anymore. Be careful about interpreting numbers after a couple of days. I had people accuse me of exciting things and pointing to Singapore, and now look, Singapore is shutting down too. Or the case fatality rate in Korea. This is a long haul issue. A few weeks of data won't give us much. People want this handled in the next twelve hours, think twelve months.
What have you seen in the therapeutics world that most reassuring?
Let me say; we're going to get through this. I don' t want to speculate on drugs. We're going to find both a vaccine and a therapeutic regimen that will be more successful. Supply chain issues will occur with both, and we're not close to either.
The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.
Stocks soar, powered by first-rate earnings and a dazzling run of economic data; Gold plays catch as G10 falls flat while oil basks in the afterglow